2011 to be Crucial for the Sourcing Industry in Europe?

IBA Group
Mark Kobayashi-Hillary

A new report, titled Europe’s Global Sourcing Market: Trends Growth and Prospects, has just been produced by research firm Everest in collaboration with Egypt’s IT development agency ITIDA. Naturally enough there are several mentions within the report of how suitable Egypt is as a destination for IT outsourcing, but there are many useful observations on the growth of the entire sourcing market within Europe.

Everest noted that there are many concerns from organisations about outsourcing beyond the EU because of the perceived lack of political stability and risk of sending services beyond the EU. This risk factor is also compounded by the national infrastructure of locations such as Egypt and India. Poor roads and a requirement to have electricity generators at the office all add to the cost of service.

Everest point out that IT sourcing is currently 61 per cent of the entire European market and their estimates of growth are quite aggressive. In the decade to 2020, sourcing from the UK is expected to grow 600 per cent, and from the other western European nations by over 1,000 per cent – they are less developed in this area than the UK.

But issues such as economic uncertainty means that all this expected growth may take some time to happen. Eric Simonson, managing partner, Everest Group said: “Volumes of work are currently static and companies remain reluctant to launch transformation programmes when they are nervous.”

The example of Ireland suddenly hitting a debt crisis and needing a bailout from the EU and IMF is sending a shudder of uncertainty through European companies. Though growth is still expected across Western Europe there needs to also be confidence in future growth for companies to invest in the transformation programmes that drive further outsourcing.

The next year will be crucial for everyone involved in the sourcing industry in Europe.

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